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Bhutan Tightens Screws on Anti-Money Laundering Regulations for Cryptocurrency Exchanges

As cryptocurrency exchanges in Bhutan continue to thrive, the kingdom’s financial authorities are cracking down on anti-money laundering (AML) regulations to prevent illicit activities.

The Impact of Cryptocurrencies on Money Laundering

Money laundering is a serious crime in which criminals obscure the origin of money generated from illegal activities. The goal is to make it seem as though the funds were earned through legitimate means. In the context of cryptocurrencies, money launderers can exploit the anonymity and speed of transactions to conceal their tracks.

  • The three stages of money laundering - layering, placement, and integration - are often used in conjunction with other techniques such as tumbling and mixing of funds.
  • Criminals may use blockchain addresses that do not require a verified identity, making it easier to launder funds anonymously.

Bhutan’s AML Regulations

To combat these risks, the Securities and Exchange Commission of Bhutan (SECB) has implemented regulations that require cryptocurrency exchanges to:

  • Register with the financial authority and submit regular reports on transactions exceeding Bhutanese ngultrum 50,000.
  • Implement know-your-customer (KYC) processes to verify the identity of customers.
  • Monitor transactions for suspicious activity using AML transaction monitoring software.

AML Compliance Checklist for Cryptocurrency Exchanges in Bhutan

To ensure compliance with AML regulations, cryptocurrency exchanges in Bhutan should follow this checklist:

  • FinCEN Registration: Register with the SECB and submit regular reports on transactions exceeding Bhutanese ngultrum 50,000.
  • KYC and Identity Verification: Implement know-your-customer processes to verify the identity of customers.
  • Transaction Monitoring: Monitor transactions for suspicious activity using AML transaction monitoring software.
  • Report Suspicious Activity: File reports with the SECB on transactions that appear suspicious or exceed the reporting threshold.
  • AML Personnel Designation: Designate a person responsible for day-to-day compliance with AML regulations.
  • Compliance Training: Provide ongoing training for anti-money laundering processes and policies.

By following these guidelines, cryptocurrency exchanges in Bhutan can ensure compliance with AML regulations and maintain the integrity of the country’s financial system.